JPMorgan CEO says bank reacted badly to red flags
- Wired World
- 14 May 2012 (South Africa)
JPMorgan Chase & Co CEO Jamie Dimon said his bank reacted badly to warning flags last month that it had large losses in financial derivatives trading, a $2 billion embarrassment that has given banking regulators new ammunition. By David Henry (Reuters).
In an interview broadcast on Sunday on NBC's "Meet the Press" television program, Dimon said bank executives were "completely wrong" in public statements they made in April after being challenged over the trades in media reports.
"We got very defensive. And people started justifying everything we did," Dimon said. "We told you something that was completely wrong a mere four weeks ago."
In early April, Bloomberg News and the Wall Street Journal published stories quoting sources in the derivatives markets saying the bank's corporate investment office had made big bets that distorted prices and could be hard for the bank to unwind.
Dimon called the stories "a tempest in a teapot" when questioned by analysts in an April 13 conference call.
On Thursday, Dimon announced that the bank, the biggest in the United States by assets, had lost $2 billion or more by mishandling a portfolio of derivatives.
The comments to NBC were Dimon's first public statements since he spoke to analysts in a conference call on Thursday. He is scheduled to speak again on Tuesday at the company's annual meeting in Tampa, Florida.
Dimon did not explain in the interview why the trades went wrong. He had declined on Thursday, too, to describe details of the trades when pressed by the analysts. He said the positions were first designed to hedge risks in the bank's investments.
"The strategy we had was badly vetted," Dimon said in the interview. "It was badly monitored. It should never have happened."
The debacle provides ammunition to advocates already calling for tougher regulation of banks, Dimon said. "This is a very unfortunate and inopportune time to have had this kind of mistake," he said.
Dimon has the been the most outspoken bank executive in arguing that new regulations being finalized and implemented by the U.S. government go too far.
"We hurt ourselves and our credibility," Dimon said. "We got to fully expect and pay the price for that." He said the huge trading loss was not "life threatening" to JPMorgan.
The interview was taped Friday as an addendum to one Dimon had recorded for the program earlier in the week on a wide range of subjects.
Photo: Jamie Dimon, chairman and chief executive of JP Morgan Chase and Co, speaks at the 2012 Simon Graduate School of Business' New York City Conference in New York May 3, 2012. REUTERS/Keith Bedford.
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